Real Estate Revolution: Gen Z Takeover Coming

⏱️ 9 min read

They say life goes in cycles. That said, a generational Tsunami change is coming. Very soon a housing revolution will begin as baby boomers unlock the doors to their homes, passing the keys to a new era. Brace yourselves, that new era will be the Gen Zers, because the tide is turning, and they’re about to catch the swell of opportunity at the right moment.

🌊🏠 #GenerationalWave #RealEstateRevolution

INTRO: Welcome to That's Life, I Swear.  This podcast is about life's happenings in this world that conjure up such words as intriguing, frightening, life-changing, inspiring, and more. I'm Rick Barron your host. 

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The Great Housing Shuffle: When Boomers Pass the Baton to Gen Z

For decades, the housing market has been a bonanza for the Baby Boomer generation. Owning an average of $19 trillion in real estate, they've held court like property moguls, leaving younger generations out in the cold. But their reign, like all empires, is starting to face a twilight. As boomers gray gracefully, a question hangs heavy: what happens to their vast real estate kingdom when they shuffle off to meet their maker?

Fast forward to 2040, and the answer gets interesting. The over-80 club will double in size, predicts the Census Bureau. Picture this: mobility scooters zipping between downsizing decisions, assisted living brochures piling up by the fireplace, and maybe a granny flat or two sprouting in the backyard. The Baby Boomer era is coming to an end. What does that mean for the new upcoming generations? 

In the approaching years, baby boomers will start to vacate their homes due to various reasons such as passing away, relocating to nursing homes, or opting for granny flats. Certain economists have foreseen the emergence of a "silver tsunami," envisioning that the departure of aging Americans will result in millions of homes becoming available, potentially leading to reduced prices and creating opportunities for younger generations accustomed to competing for limited resources. 

Alternatively, some have compared this phenomenon to a gradual and predictable glacial shift, suggesting that it may not significantly influence home prices as much as those in their 20s and 30s might wish for. Regardless of the extent to which the departure of baby boomers impacts the market, the shift in leadership will make one thing certain: Gen Z stands poised to inherit the house keys. 

By the time the boomer exodus reaches its crescendo, these youngsters will be entering their prime homebuying years, ready to snap up the bounty. And guess what? Boomers downsizing often means shedding starter homes – the exact kind Gen Z craves but rarely finds in today's stingy new-build market. So, buckle up, Gen Z. The housing baton is about to be passed.

The Great Housing Reshuffle: Will Gen Z Finally Get a Shot?

For decades, the housing market has been a one-way street, paved by baby boomers. Owning a staggering 41.6% of the nation's real estate, they've held the keys like kings, leaving younger generations scrambling for any real estate crumbs. 

GEN Z homebuyers. Courtesy of Yahoo Images

Now, predicting the real estate equivalent of a weather balloon is about as easy as nailing Jell-O to the wall. Mortgage rates? A crapshoot. New construction? A fickle friend. But one thing's for certain: demographics march to a different drum. Odeta Kushi, the deputy chief economist at First American, points out that history whispers a clear message – boomers will start leaving their castles around 2030, when they reach the ripe age of 80. That's right, millions of homes are about to hit the market, and Gen Z is perfectly positioned to snag the best seats.

But hold your horses, eager beavers. This ain't no housing free-for-all. Gen Y/Millennials, well past the typical first-time buyer age, will likely still face a bumpy road. Crumbling kitchens and leaky roofs won't magically vanish, likely adding tens of thousands to the price tag of their "starter" homes. And let's not forget the ever-present mortgage gremlin, who might be throwing fireballs at interest rates by then.

So, is this the silver tsunami of opportunity everyone's been talking about? Some economists predict a slower, glacier-like pace, where the market gradually adapts to the influx of boomer homes. Excess supply? No problem! Rental conversions will act like a pressure release valve, keeping prices from plummeting. Think of it as a grand swap meet – boomers trade in their sprawling estates for cozy retirement condos, while Gen Z snags those coveted starter homes they've been lusting after.

Yes, the housing game is about to change hands, and Gen Z is holding the lucky ticket. It won't be a cakewalk, but with a bit of grit and savvy, they might just score the winning hand in the Great Housing Reshuffle. 

The Boomer Exodus: Gen Z's Ticket to the Housing Throne?

Forget "silver tsunami," picture a stately glacier: the slow, steady movement of Baby Boomers leaving their sprawling empires behind. While some anticipate a flood of homes crashing onto the market, others, like economist Gary Engelhardt, see a more measured thaw. His model predicts a gentle increase of roughly 250,000 surplus homes annually until 2032 – a drop in the bucket compared to the 3.8 million sales in 2023.

So, does this mean a housing free-for-all? Not quite. Millennials, past the first-time buyer prime, will likely face their own challenges. But for Gen Z, the picture looks brighter. As boomers gracefully exit stage right, they leave a power vacuum ripe for the picking. And Gen Z, with their tech-savvy minds, are poised to snag the crown.

Think of it like the grand housing shuffle. Boomers trade their sprawling castles for cozy retirement condos. Millennials, with their established careers and families, might finally find their dream homes at a more palatable price. And Gen Z? They get the pick of the litter – those starter homes they've been eyeing from afar.

Millennials: Locked Out, Gen Z: Keys in Hand?

For millennials, the housing market feels like a cruel game of musical chairs. Burdened by student debt and squeezed by the Great Recession, they watched as homeownership drifted further out of reach. 

Millennials pinned their hopes on the "silver tsunami," a tidal wave of boomer homes supposedly crashing onto the market, lowering prices and easing their entry. But hold on, the forecast might not be quite so sunny.

"Millennials won't be the main beneficiaries," admits Jessica Lautz, housing expert at the National Association of Realtors. By the time boomer houses flood the market, most millennials will have already stretched their budgets to secure their first homes.

Still, not all hope is lost. For those millennials who managed to snag a foothold, boomer downsizing could unlock bigger, more comfortable homes in desirable locations. Think spacious suburbs and bustling city centers – prime real estate ripe for the taking. But for those still yearning for their first rung on the property ladder, the wait may still be agonizing.

According to Redfin's analysis, in 2022, 30% of 25-year-olds owned their homes, surpassing the 27% rate for Gen Xers at a similar life stage. Meanwhile, millennials were still grappling to match their parents, with Redfin reporting a homeownership rate of 62% for 40-year-olds in 2022, down from the 69% rate for boomers at the same age. 

By 2030, the oldest members of Generation Z will be in their 30s, entering the prime years for first-time homebuyers. Given that the Gen Z cohort is smaller than the millennial group and will likely face less competition from boomers, they might experience less market pressure than the preceding generation. 

A report from First American even suggested that this reduced demand could contribute to alleviating the housing shortage over the next decade. The timing of the baby boomers' exit appears poised to predominantly benefit younger generations, including Gen Z and Gen Alpha, positioning them on more stable ground than their forerunners.

 Beyond the Silver Tsunami: Don't Pop the Champagne Just Yet

The "silver tsunami" of boomers leaving their homes holds the promise of calmer seas for younger generations in the housing market. But before Gen Z pops the champagne corks, let's temper our expectations. Remember, this isn't a magical wave of affordable beach bungalows washing ashore.

While it's true that many boomer homes will hit the market in the next decade, there's more to it than just numbers. Location, location, location still plays a pivotal role. Not all younger folks crave sprawling suburban castles built in the 70s, especially if they're miles from buzzing city centers or desirable job markets. 

And let's face it, many of these aging homes will likely need a serious modernization overhaul to woo millennials and Gen Zers. A report from First American suggested the reduced demand could help narrow the housing shortage over the next decade. The timing of boomers' exit will mostly benefit younger generations, like Gen Z and Gen Alpha, who should find themselves on steadier footing than their predecessors.

Jessica Lautz, the deputy chief economist at the National Association of Realtors, echoes this caution. She warns against viewing the boomer exodus as a singular solution to the housing crisis. "We have to think beyond the boomers," she emphasizes. "Building more affordable inventory, not just waiting for them to downsize, is the real answer."

So, does this mean Gen Z is out of luck? Not entirely. While millennials might miss out on the prime pickings due to their timing, their younger siblings could indeed find themselves in a sweeter spot. With a smaller cohort size and less competition from boomers, Gen Z stands a better chance of navigating a calmer market. A First American report even suggests their arrival could help shrink the housing shortage within a decade.

What can we learn from this story? What's the takeaway?

The bottom line? The housing storm isn't magically subsiding with the boomers' retreat. But for Gen Z, the winds are definitely shifting. The path ahead may not be a smooth sail, but the stars seem to be aligning for a potentially gentler landing compared to their older siblings. So, buckle up, Zoomers, the housing journey continues, and while it might not be a champagne-popping extravaganza, there's definitely reason for cautious optimism. 

Well, there you go, my friends; that's life, I swear

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